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Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012

Floor Speech

By:
Date:
Location: Washington, DC

Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012

BREAK IN TRANSCRIPT

AMENDMENT NO. 22 OFFERED BY MR. GARRETT

Mr. GARRETT. Mr. Chairman, I have an amendment at the desk.

The Acting CHAIR. The Clerk will designate the amendment.

The text of the amendment is as follows:

At the end of the bill, before the short title, insert the following:

Sec. __. None of the funds made available by this Act may be used by the Commodity Futures Trading Commission to promulgate any final rules under paragraphs (13) or (14) of section 2(a) of the Commodity Exchange Act, as added by section 727 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, until 12 months after the promulgation of final swap transaction reporting rules under section 21 of the Commodity Exchange Act.

The Acting CHAIR. The gentleman from New Jersey is recognized for 5 minutes.

Mr. GARRETT. This is a protect retiree pensions and jobs by ensuring a well-functioning swaps market amendment.

Mr. Chairman, I ask for your support today for my amendment which would do that--prevent unintended consequences from impacting literally millions of pension plan participants and the beneficiaries that follow. My amendment would simply require the CFTC to finalize important data-reporting rules before they implement new rules for certain swap transactions.

See, with this change, it would be able to collect the transaction data that it needs to determine the reasonable standards for block trade levels and real-time reporting requirements without first disrupting the marketplace. You see, finalizing any numerical determination of block trade sizes or setting real-time reporting requirement timeframes prior to having necessary data, really, if you think about it, would be arbitrary, would encourage litigation, and will likely have the unintended consequences on those very same pension funds I talked about--their ability to protect their investors, as well as on the economic growth of our country and job creation.

So, what this amendment would do is require swap data-reporting rules to be finalized and be in place before promulgating the final block trade rules or those real-time reporting criteria rules.

Now, I do this because numerous market participants of all shapes and sizes have sent to us public comment letters warning of the dangers of getting block trades and real-time rules wrong. I will just give you this one. I had others. I will just give you one of those letters, and that comes from the American Benefits Council. Who are they? Well, they and their members provide benefit services to over 100 million Americans in the Committee on Investment of Employee Benefit Assets, whose members include more than 100 of the country's largest pension funds and manage more than $1 trillion on behalf of 15 million member plan participants and the beneficiaries.

I will just give you one quote from this, not all the other ones: We have concerns about the sequencing of proposed real-time reporting rules in relation to the collection of swap market information. We believe that they should first obtain market information via reporting of trades of swap data repositories--which have to be set up, of course--and then propose rules based on this data such as real-time reporting, which necessarily would better serve the intended purposes.

So, in conclusion, by instituting a more commonsense approach to these rule-makings, we're giving them the ability to collect that data of the swap transaction information to determine those reasonable block trade levels that they have to set, the real-time reporting requirement as well, and to do so in a way that will not impair the well-functioning of the marketplace.

With that, I yield back the balance of my time.

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Mr. PETERSON. Mr. Chairman, I rise to oppose the amendment and move to strike the last word.

The Acting CHAIR. The gentleman from Minnesota is recognized for 5 minutes.

Mr. PETERSON. Mr. Chairman and Members, this is part of the continuing effort to delay the implementation of the Dodd-Frank Act as long as possible. We've seen some other examples of that. This section deals with public reporting swap data.

What people need to understand, the people that are most afraid of the public disclosure are not the people that are using this market. It's the banks. What this is really about and what this end-user debate that's been going on is about more than anything else is that the public disclosure of this information will lower the spreads of the Wall Street banks that do these swaps. That's what's the bottom line of this whole deal.

If the market participants know more, like what we do in the exchange trading and so forth, the margins are going to come down and the profits of these big banks are going to shrink. In fact, some people have said that they think that once this is implemented that it's probably going to reduce the profits of the Wall Street banks 40 percent. And they don't like it, and they want to delay it.

So some would argue that we need more data collection, and I guess that's what you are arguing before this public reporting. I think for some swaps, that is the case, and I will agree with that. But on other swaps, the institutions are already collecting this data. They can go forward with this public reporting. We have the information. There's no reason to delay it. In other cases where we don't have the information, it probably isn't appropriate to delay it.

But the CFTC has the discretion to do this, and it's right in the law. It's on page 328 of the conference report. And we've put in there the criteria to allow them to move ahead with the swaps where we have the data and to delay it where we don't have the data. But what you are trying to do is you are going to delay the whole thing, and all it's going to do is ensure that these profits and these big bonuses that they're paying on Wall Street can go on longer than they need to.

So I don't know any reason why we need to do this. If you read this, they have all the discretion. All of the problems that people brought up with the block trades and these other things that people were concerned about are in there.

And the last thing it says: They have to take into account whether the public disclosure will materially reduce market liquidity. And they are doing that, and they are doing that as we're going through this process. And I believe that at the end of the day, it's going to be fine.

Mr. GARRETT. Will the gentleman yield?

Mr. PETERSON. I yield to the gentleman from New Jersey.

Mr. GARRETT. So the gentleman agrees that there is only partial information at this point in time out there.

Mr. PETERSON. On some things.

Mr. GARRETT. On some things.

On other things, the gentleman would agree that there is no information out there at all on certain--

Mr. PETERSON. Well, I wouldn't say there isn't any information. Some of these are so thinly traded that you are never going to be able to have real-time reporting. We understand that, and there is not going to be a requirement on those. But there's no reason to stop the real-time reporting where we have the information and where that information will make these prices better for the people that use it.

And this is the same issue with the end users. They're going to get a better deal if we allow this disclosure. Why they're fighting us is beyond me, unless they're in cahoots with the Wall Street banks. I'm not sure. Do people think that the folks on Wall Street aren't making enough money? Is that what this is about? I don't know.

Mr. GARRETT. I would appreciate if the gentleman would not make the allegation that we make these applications here because anyone is in cahoots with Wall Street banks, such as you've just made.

Mr. PETERSON. They are the people that are against this. They were against it when we did it. So I just don't buy that the pension funds are the ones that are concerned about this because the things that they're concerned about are covered in the law, and they're being taken into account by Chairman Gensler and the people at the CFTC as they develop these rules.

Mr. GARRETT. If the gentleman will yield, I know I read through it quickly because I was asked to move along things quickly at the end of the evening, but one of the documents that I read was one of the comment letters. It was not from the Wall Street bank but was from the American Benefits Council, those very same pension benefits companies speaking about this. They are the ones who are raising it. So it is those end users. Those are the participants. Those people are representing beneficiaries. They are the ones who are asking for this delay. It's not the Wall Street banks that I'm making reference to. It's the pension funds.

Mr. PETERSON. There are hundreds of thousands of comments. I haven't read them all. I don't know what they all say.

Mr. GARRETT. We can supply you with the ones.

Mr. PETERSON. Well, I have end users coming into my office arguing against their own interests. So I can't figure it out.

The Acting CHAIR. The time of the gentleman has expired.

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